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Patrick Street Productions produces musicals - Edexcel - A-Level Economics A - Question 4 - 2021 - Paper 1
Question 4
Patrick Street Productions produces musicals. Its latest production is ‘It’s a Wonderful Life’ and the total cost of this production is $200,000. The ticket price is... show full transcript
Worked Solution & Example Answer:Patrick Street Productions produces musicals - Edexcel - A-Level Economics A - Question 4 - 2021 - Paper 1
Step 1
Calculate the total revenue from ticket sales for ‘It’s a Wonderful Life’
Answer
To calculate the total revenue from ticket sales, we can use the following formula:
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Determine the total number of tickets sold:
Total seats = 300
Total shows = 5 (as mentioned in the question)
Therefore, total tickets sold = 300 seats * 5 shows = 1500 tickets.
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Calculate the total revenue from ticket sales:
Total revenue = Ticket price * Total tickets sold
Total revenue = 60,000.
Step 2
Calculate the value of the government subsidy necessary for this production to cover all of its costs
Answer
To find the value of the government subsidy, follow these steps:
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Calculate the percentage contributions to the total cost:
- Revenue from ticket sales contributes 30% of total costs.
- Charitable donations contribute 12.5% of total costs.
- Hence, total contributions from ticket sales and donations = 30% + 12.5% = 42.5%.
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Find the remaining percentage that needs to be covered:
Remaining percentage = 100% - 42.5% = 57.5%.
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Calculate the subsidy value:
Total cost = $200,000
Government subsidy = 57.5% of 115,000.